Subject: Tax Reform Comments Comment: For quite some time, the consensus has been in my group “tax discussions” that a federal sales tax on consumption would be the only “fair” way to administer tax. Since the idea is finally getting exposure and acceptance, this is a perfect time to weigh in with my thoughts on tax reform. The viability of a national sales tax is based on a couple of main principles: 1) The more you have, the more you spend. Therefore, the “rich” would pay more tax since they spend more. Simple logic, and 99% true. There are of course certain skin-flints that will live in shacks without electricity and grow their own food, and all the while amass a fortune under their bed or in a jar buried in the back yard. This is an illness that most Americans are immune to, so taxes will be paid every time someone goes shopping. The current system has shelters and loopholes that the wealthier Americans can use to avoid paying taxes, and the result is that they pay a smaller percentage of their gross income on taxes than average middle-income Americans. 2) There is a large tax base that is untapped. These are the thieves, bank robbers, drug dealers, prostitutes, street corner panhandlers, self-employed and anyone else with a means to make money that is not going to be reported on a W-2 or 1099 form. Guess what these people do with this “underground” income? They spend it on stuff. The longer I live, the more I encounter people who make money they don’t report. I guess my irritation with this is only due to the fact that I lack the entrepreneurial spirit required to make money “under the table” at anything – I have always worked for a large corporation that withholds taxes on every penny I make. |